Some wine leaders pleased with pending demise of forest-to-vineyard project

The Wheatfield Fork of the Gualala River reflects a portion of the newly acquired open space of Preservation Ranch, Tuesday Feb. 26, 2013, on the east end of the property. (Kent Porter / Press Democrat) 2013

BY BRETT WILKISON

THE PRESS DEMOCRAT

March 1, 2013, 10:49PM

03/01/2013

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Sonoma County wine industry representatives and grape growers are voicing some relief over news this week of the tentative conservation deal that would shield nearly 20,000 acres in northwestern Sonoma County from a disputed forest-to-vineyard conversion project.

The large proposal called for clearing almost 1,800 acres of former commercial timberland to grow premium pinot noir and chardonnay grapes. Industry officials said it could have flooded the market, crowding out small-scale area growers.

It also would have drawn the local industry further into a pitched land-use battle and widening national debate over the reach of vineyards into remote North Coast forests.

"That would have been a battle that we didn't invite or initiate, and that we didn't want to be involved in but we would have been involved in," said Nick Frey, president of the Sonoma County Winegrape Commission.

The purchase agreement, confirmed by conservation officials on Tuesday, is likely to cool that fight by curtailing the most controversial elements of the so-called Preservation Ranch proposal. That project has been controlled for years by CalPERS, the giant state employee pension fund.

Vineyard plans for the sprawling property outside of Annapolis would be eliminated, as would other development potential. The ranch spans a rugged swath of the coastal range, including second- and third-growth redwood and fir forest, oak woodlands and salmon and steelhead streams.

The $24.5 million deal involves two private conservation groups and two public agencies and is set to be complete by the end of May. It was hailed this week by environmentalists and others opposed to forest conversions for vineyards.

Some grape growers and wine industry representatives also chimed in with support. The project's environmental risks — it was called the largest forest conversion for agriculture in modern state history — and the resulting blowback for vintners and growers were serious issues, they said.

"All it takes is one mistake and the entire industry gets a black eye," said Duff Bevill, founder of Bevill Vineyard Management. "You want to support agriculture, but this was a tough one. The good news is that it has resolved itself."

Industry and project critics have pointed especially to impacts on water resources and wildlife. Preservation Ranch officials sought to downplay those concerns with assurances that the project would improve stream and forest health.

But the public debate never seemed to turn in the project's favor. The county's decision process was likely to have been bruising, leaving Wine Country with a battered image, industry representatives said.

"The public outcry has been there for years and was only going to heighten as it moved forward," said Frey, the winegrape commission president. "We're pleased that this has been resolved."

Wine industry leaders said opinion was not unified on the project, and that many were still unsure what to make of the conservation purchase.

"I think it's kind of neutral," Doug McIlroy, director of winegrowing for Rodney Strong, said about industry opinion. "I don't think there were a lot of people on the vineyard side that had a comment on it either way. Everyone was curious to see what unfolded and now we see what we've got."

But several vintners and growers said the supply impacts alone from such a large project could have caused problems for small-scale growers.

It would have increased Sonoma County vineyard acreage by about 2 percent, with the goal of fetching high-end prices over most of the crop.

"My guess is if those grapes are sold, probably some grapes from a family-owned vineyard are not," said Frey, the winegrape commission president. "The project was on a different scale and had a different objective than many of our family farmers and grape growers. We want to retain those."

The project's apparent demise has unleashed a wave of questions and doubts about CalPERS' investment in the project. It began in 2004, through a Napa-based vineyard development firm that bought the 19,652-acre property for $28.5 million.

The pension fund severed its ties with the Napa firm in late 2011 but retained control of the land and the project.

Critics said the proposal was built on flawed assumptions about costs and the wine market, colored by a rosier economic outlook.

"I didn't think it made sense to begin with," said Nick Peay, co-owner of Peay Vineyards, which includes 52 acres of premium pinot noir, chardonnay and syrah grapes near Annapolis.

He called the costs of forest conversion and management of far-flung vineyards "ridiculously expensive." The payoff — grapes fetching up to $6,000 a ton over hundreds of acres — was also illusory, he said.

"I hate to see fellow business people fail, but I do think this was a mistake," Peay said.

Preservation Ranch officials have defended the project.

"We wouldn't be doing this if it didn't make economic sense," Tom Adams, a director with Premier Pacific Vineyards, the project's former Napa-based management firm, said in mid-2011. Adams continues to be a consultant on the project but could not be reached for comment this week.

Another consultant, Jeffrey Redding, a former Napa County planning director, said he was not aware of the sale until it surfaced in a Press Democrat story Wednesday.

In the aftermath, county planners said Redding told them that the project application is still active until future direction from CalPERS.

CalPERS officials declined to comment on the sale Tuesday. The pension fund issued a brief statement Wednesday, saying it anticipated the deal would close in May and that details of the transaction will be available at that time.

Calls to GI Partners, the Menlo Park—based private equity group now managing CalPERS' vineyard portfolio, were not returned this week.

News of the purchase agreement continues to ripple through environmental circles.

Victoria Brandon, chairwoman of the Sierra Club's Redwood Chapter, a chief foe of North Coast forest conversions, said the group was "thrilled and delighted with the preservation of Preservation Ranch."

Conservation officials involved in the deal say they plan to appeal to the local wine industry for help in closing an estimated $5 million gap in funding for the purchase.

"I wouldn't be surprised if there is a lot of interest in this," said Ralph Benson, executive director of the Sonoma Land Trust. The lead organization in the deal and would-be owner of the land is The Conservation Fund, based in Virginia, which is set to contribute $6 million to the purchase.

The California Coastal Conservancy could contribute up to $10 million and Sonoma County's Agricultural Preservation and Open Space District could add up to $4 million. The amounts for those two public agencies are subject to approval by their boards of directors. For the county Open Space District that is the Board of Supervisors.

Sonoma County wine industry representatives and grape growers are voicing some relief over news this week of the tentative conservation deal that would shield nearly 20,000 acres in northwestern Sonoma County from a disputed forest-to-vineyard conversion project.

The large proposal called for clearing almost 1,800 acres of former commercial timberland to grow premium pinot noir and chardonnay grapes. Industry officials said it could have flooded the market, crowding out small-scale area growers.

It also would have drawn the local industry further into a pitched land-use battle and widening national debate over the reach of vineyards into remote North Coast forests.

"That would have been a battle that we didn't invite or initiate, and that we didn't want to be involved in but we would have been involved in," said Nick Frey, president of the Sonoma County Winegrape Commission.

The purchase agreement, confirmed by conservation officials on Tuesday, is likely to cool that fight by curtailing the most controversial elements of the so-called Preservation Ranch proposal. That project has been controlled for years by CalPERS, the giant state employee pension fund.

Vineyard plans for the sprawling property outside of Annapolis would be eliminated, as would other development potential. The ranch spans a rugged swath of the coastal range, including second- and third-growth redwood and fir forest, oak woodlands and salmon and steelhead streams.

The $24.5 million deal involves two private conservation groups and two public agencies and is set to be complete by the end of May. It was hailed this week by environmentalists and others opposed to forest conversions for vineyards.

Some grape growers and wine industry representatives also chimed in with support. The project's environmental risks — it was called the largest forest conversion for agriculture in modern state history — and the resulting blowback for vintners and growers were serious issues, they said.

"All it takes is one mistake and the entire industry gets a black eye," said Duff Bevill, founder of Bevill Vineyard Management. "You want to support agriculture, but this was a tough one. The good news is that it has resolved itself."

Industry and project critics have pointed especially to impacts on water resources and wildlife. Preservation Ranch officials sought to downplay those concerns with assurances that the project would improve stream and forest health.

But the public debate never seemed to turn in the project's favor. The county's decision process was likely to have been bruising, leaving Wine Country with a battered image, industry representatives said.

"The public outcry has been there for years and was only going to heighten as it moved forward," said Frey, the winegrape commission president. "We're pleased that this has been resolved."

Wine industry leaders said opinion was not unified on the project, and that many were still unsure what to make of the conservation purchase.

"I think it's kind of neutral," Doug McIlroy, director of winegrowing for Rodney Strong, said about industry opinion. "I don't think there were a lot of people on the vineyard side that had a comment on it either way. Everyone was curious to see what unfolded and now we see what we've got."

But several vintners and growers said the supply impacts alone from such a large project could have caused problems for small-scale growers.

It would have increased Sonoma County vineyard acreage by about 2 percent, with the goal of fetching high-end prices over most of the crop.

"My guess is if those grapes are sold, probably some grapes from a family-owned vineyard are not," said Frey, the winegrape commission president. "The project was on a different scale and had a different objective than many of our family farmers and grape growers. We want to retain those."

The project's apparent demise has unleashed a wave of questions and doubts about CalPERS' investment in the project. It began in 2004, through a Napa-based vineyard development firm that bought the 19,652-acre property for $28.5 million.

The pension fund severed its ties with the Napa firm in late 2011 but retained control of the land and the project.

Critics said the proposal was built on flawed assumptions about costs and the wine market, colored by a rosier economic outlook.

"I didn't think it made sense to begin with," said Nick Peay, co-owner of Peay Vineyards, which includes 52 acres of premium pinot noir, chardonnay and syrah grapes near Annapolis.

He called the costs of forest conversion and management of far-flung vineyards "ridiculously expensive." The payoff — grapes fetching up to $6,000 a ton over hundreds of acres — was also illusory, he said.

"I hate to see fellow business people fail, but I do think this was a mistake," Peay said.

Preservation Ranch officials have defended the project.

"We wouldn't be doing this if it didn't make economic sense," Tom Adams, a director with Premier Pacific Vineyards, the project's former Napa-based management firm, said in mid-2011. Adams continues to be a consultant on the project but could not be reached for comment this week.

Another consultant, Jeffrey Redding, a former Napa County planning director, said he was not aware of the sale until it surfaced in a Press Democrat story Wednesday.

In the aftermath, county planners said Redding told them that the project application is still active until future direction from CalPERS.

CalPERS officials declined to comment on the sale Tuesday. The pension fund issued a brief statement Wednesday, saying it anticipated the deal would close in May and that details of the transaction will be available at that time.

Calls to GI Partners, the Menlo Park—based private equity group now managing CalPERS' vineyard portfolio, were not returned this week.

News of the purchase agreement continues to ripple through environmental circles.

Victoria Brandon, chairwoman of the Sierra Club's Redwood Chapter, a chief foe of North Coast forest conversions, said the group was "thrilled and delighted with the preservation of Preservation Ranch."

Conservation officials involved in the deal say they plan to appeal to the local wine industry for help in closing an estimated $5 million gap in funding for the purchase.

"I wouldn't be surprised if there is a lot of interest in this," said Ralph Benson, executive director of the Sonoma Land Trust. The lead organization in the deal and would-be owner of the land is The Conservation Fund, based in Virginia, which is set to contribute $6 million to the purchase.

The California Coastal Conservancy could contribute up to $10 million and Sonoma County's Agricultural Preservation and Open Space District could add up to $4 million. The amounts for those two public agencies are subject to approval by their boards of directors. For the county Open Space District that is the Board of Supervisors.